This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/business/2013/jul/04/co-op-bank-black-hole

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Co-op looks for answers over bank's £1.5bn black hole Co-op looks for answers over bank's £1.5bn black hole
(3 months later)
The Co-operative Group is to launch an inquiry into how its banking arm ended up with the £1.5bn black hole that will need filling by small investors.The Co-operative Group is to launch an inquiry into how its banking arm ended up with the £1.5bn black hole that will need filling by small investors.
The group is close to appointing an independent figure to head the postmortem into its disastrous acquisition of Britannia and failed takeover of more than 600 Lloyds bank branches.The group is close to appointing an independent figure to head the postmortem into its disastrous acquisition of Britannia and failed takeover of more than 600 Lloyds bank branches.
The Co-op has disclosed plans to plug the £1.5bn capital gap by forcing bond investors, including many retail savers, to take a hit on their investment. They will be offered shares, resulting in a stock market listing for the banking arm.The Co-op has disclosed plans to plug the £1.5bn capital gap by forcing bond investors, including many retail savers, to take a hit on their investment. They will be offered shares, resulting in a stock market listing for the banking arm.
New group chief executive Euan Sutherland has commissioned the inquiry, which is expected to report back next year, in time for May's annual member meeting.New group chief executive Euan Sutherland has commissioned the inquiry, which is expected to report back next year, in time for May's annual member meeting.
The yawning gap in the Co-op's capital reserves largely stems from commercial property loans acquired through the merger with Britannia in 2009. Bad loans made by Britannia were behind almost £470m of writedowns in 2012, which sent the group plunging to a £674m loss. Concerns over the Co-op's finances came to a head in May after credit ratings agency Moody's downgraded the bank to junk status, just weeks after it pulled out of a deal to buy 631 branches from Lloyds Banking Group.The yawning gap in the Co-op's capital reserves largely stems from commercial property loans acquired through the merger with Britannia in 2009. Bad loans made by Britannia were behind almost £470m of writedowns in 2012, which sent the group plunging to a £674m loss. Concerns over the Co-op's finances came to a head in May after credit ratings agency Moody's downgraded the bank to junk status, just weeks after it pulled out of a deal to buy 631 branches from Lloyds Banking Group.
The Co-op, which has around 4.7 million banking customers, is also planning to raise funds through the disposal of its insurance business, although the bulk of the rescue is coming from bondholders. The investor "bail-in" is due to happen in October.The Co-op, which has around 4.7 million banking customers, is also planning to raise funds through the disposal of its insurance business, although the bulk of the rescue is coming from bondholders. The investor "bail-in" is due to happen in October.
Former B&Q boss Sutherland took over from previous chief executive Peter Marks in May and is keen to examine the circumstances around the Britannia and Lloyds deals, including the roles played by key executives.Former B&Q boss Sutherland took over from previous chief executive Peter Marks in May and is keen to examine the circumstances around the Britannia and Lloyds deals, including the roles played by key executives.
Marks hailed the deal to buy the Lloyds branches as the "biggest shake-up in high-street banking in a generation". But the Co-op pulled out in April, saying it was not in members' best interests.Marks hailed the deal to buy the Lloyds branches as the "biggest shake-up in high-street banking in a generation". But the Co-op pulled out in April, saying it was not in members' best interests.
The inquiry will also look at whether it can claw back rewards paid to former executives.The inquiry will also look at whether it can claw back rewards paid to former executives.
Our editors' picks for the day's top news and commentary delivered to your inbox each morning.